But I think Clay’s ideas are worth hearing in toto, so using audio from the Shorenstein Center, we’ve made a transcript of his entire talk. If you’d like, while you’re reading, you can listen to the audio in the player below, or download the MP3. I’ve included timestamps in the transcript so you can jump to particular spots if you’d like.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

First, a few highlights from Clay. On the temporary alignment of advertising-based business models and difficult journalism:

…it was an accident. There was a set of forces that made that possible. And they weren’t deep truths — the commercial success of newspapers and their linking of that to accountability journalism wasn’t a deep truth about reality. Best Buy was not willing to support the Baghdad bureau because Best Buy cared about news from Baghdad. They just didn’t have any other good choices.

On the online companies that have eaten away at parts of newspapers’ ad model:

The institutions harrying newspapers — Monster and Match and Craigslist — all have the logic that if you want to list a job or sell a bike, you don’t go to the place that’s printing news from Antananarivo and the crossword puzzle. You go to the place that’s good for listing jobs and selling bikes. And so if you had a good idea for a business, you wouldn’t launch it in order to give the profits to the newsroom. You’d launch it in order to give the profits to the shareholders.

And on his pessimism about the current moment:

I think a bad thing is going to happen, right? And it’s amazing to me how much, in a conversation conducted by adults, the possibility that maybe things are just going to get a lot worse for a while does not seem to be something people are taking seriously. But I think this falling into relative corruption of moderate-sized cities and towns — I think that’s baked into the current environment. I don’t think there’s any way we can get out of that kind of thing. So I think we are headed into a long trough of decline in accountability journalism, because the old models are breaking faster than the new models can be put into place.

Reading the full talk is worth the time investment. It starts below.

UPDATE: Oct. 7: Turns out our friends at the Berkman Center got video of the session.

Alex Jones, director of the Shorenstein Center: Let us begin. It is my great pleasure to have as our guest today Clay Shirky, who I think needs no introduction to the people in this room, but I want to say just a few brief things about. First of all, I don’t think there is any question that he is one of the most interesting and profound thinkers about what’s going on with the web and especially what’s going on with the web as regards news. Some of you probably — many of you probably saw his blog post of…how many, about a year ago? [Shirky: March.] It made a profound impact on the people in my world about what really is going on now, the chaos that is actually unfolding as a result of this transformational technological change that we’re going through, which is this sort of epochal kind of moment, from my perspective. And I think that Clay would say the same.

I come at this issue personally from a perspective of news values and the effort to try to preserve them in this world. But this new world is one that is unfolding with such complexity and such speed and such difficult passage that has just really begun, that people like Clay are absolutely, in my opinion, essential and instrumental in trying to cast a path that will reflect both the realities of what’s going on and the values that I think many of us want very much to preserve for our democratic system and the role of news in that. Clay, we are very glad to have you, and the floor is yours. Our procedure here is, we hope that you’ll speak for you know, 20, 25 minutes, and then we’ll open it up.

(1:56)

Clay Shirky: Let me start with a story that I think will encapsulate a bunch of these issues as I go on. Back from January of 2002, when the Boston Globe published a two-part series on the upcoming trial of Father John Geoghan, who was a priest and pedophile who had been employed by the Catholic Church since the 1960s. Three Globe reporters had been working on this story and they had gotten hold of the documents the church had been forced to submit in the upcoming trial. Turned out that Geoghan had raped or fondled over 100 boys in his care, and was able to do this in diocese after diocese because every time the accusations would start, the Catholic Church would take him off to rehabilitation, which was ineffective, then assign him to a new diocese, and he went and moved through several parishes in the area.

The reaction to this story as you can imagine was instant and horrified shock on the part of the Catholic laity. Story went worldwide. So many people read it that The New York Times company, the parent company of The Boston Globe, mentioned that story in their investors relations document at the end of that quarter because the size and global scope of the audience was literally unprecedented in the Times Co.’s history. Any organization set up to deal with issues of priestly abuse got an enormous — got wind in their sales from this article. SNAP, the Survivors Network of those Abused by Priests, grew by a factor of three in a single year after its 10-year history. Voice of the Faithful, an organization that was centered originally in the Boston area, went from 30 people in a church basement that January concerned about what to do, to 25,000 members in 21 countries in 6 months. The Bishop Accountability Project, which set up a database to prevent the “this is a rare occasion that doesn’t happen elsewhere” kinds of excuses from taking hold, added that article and then used those documents to expand their observations to elsewhere.

There is an unbroken line from that article — there is an unbroken line from the Globe’s publication of that article to the worldwide pressure of the Catholic Church is now under, to both account for its past and alter its behavior in the future. Which, by way of introduction, makes it clear what’s at stake with what Professor Jones calls accountability journalism. This is a classic example of, again quoting from Losing the News, of the iron core of journalism and in particular the investigative journalism category, where three reporters are dispatched for a long period on a story that may or may not pan out.

The other input to that — the other input, besides accountability journalism mattering in this way, is that newspapers’ ability to produce accountability journalism is shrinking. And those two facts together put us at really, I think, an epochal moment of figuring out what to do. So I want to offer up some observations in two parts.

One, why it is I think that newspapers’ ability to produce accountability journalism is shrinking, and why I am convinced that those changes are secular, monotonic, and irreversible, rather than being merely cyclic and waiting for the next go around. And then two, I want to talk about the features of a journalistic ecosystem that I think we’ll have to obtain in to get anything like the accountability journalism we’ve been used to out of the current media landscape.

(6:05)

The temporary revenue moment

So the first observation — made wily and probably in the most depth by Paul Starr in Creation of the Media — is that, dated from some time between the rise of the penny press and the end of the Second World War, we had a very unusual circumstance — and I think especially in the United States — where we had commercial entities producing critical public goods. We had ad-supported newspapers producing accountability journalism.

Now, it’s unusual to have that degree of focus on essentially both missions — both making a profit and producing this kind of public value. But that was the historic circumstance, and it lasted for decades. But it was an accident. There was a set of forces that made that possible. And they weren’t deep truths — the commercial success of newspapers and their linking of that to accountability journalism wasn’t a deep truth about reality. Best Buy was not willing to support the Baghdad bureau because Best Buy cared about news from Baghdad. They just didn’t have any other good choices.

I think the first thing to recognize about the commercial structures of the newspaper industry is that it is not enough for newspapers to run at a profit to reverse the current threat and change. If next year they all started throwing off 30 percent free cash flow again, that would not yet reverse the change, because there were other characteristics of the commercial environment as well.

The first of them was that advertisers were forced to overpay for the services they received, because there weren’t many alternatives for reaching people with display ads — or especially things like coupons. And because they overpaid, the newspapers essentially had the kind of speculative investment capital to do long-range, high-risk work. So it isn’t enough to be commercial; you have to be commercial at a level above what some theoretical market would bare.

My friend Bob Spinrad — who recently passed away, but who ran Xerox PARC, the Palo Alto Research Center, for a while — said, “The only institutions that do R&D are either institutions that are monopolies or wrongly believe that they are.” Xerox is an example of an institution that wrongly believed it was a monopoly and was willing to fund the invention of Ethernet and laptops and the graphic user interface and all the rest of it that we take for granted now. IBM, AT&T — the list of commercial entities that believed that they were monopolies, and during the time that they were monopolies could take this philosophy of overinvesting in speculative work is large. But when the commercial inputs to that kind of R&D work, the R&D work ends as well.

(9:19)

The ability to push back advertisers

The second characteristic of the happy state of the 20th-century newspapering was that the advertisers were not only overcharged, they were underserved. Not only did they have to deliver more money to the newspapers than they would have wanted, they didn’t even get to say: “And don’t report on my industry, please.” There was a time when Ford went to The New York Times during the rollover stories and said, “You know, if you keep going on this, we may just pull all Ford ads in The New York Times.” To which the Times said, “Okay.” And the ability to do that — to say essentially to the advertiser, “Where else are you going to go?” — was a big part of what kept newspapers from suffering from commercial capture. It worked better for bigger papers than smaller papers, but that bulwark of guest commercial capture was a feature of the 20th century commercial market. Neither of those, neither the overpaying or the underserving, is true in the current market any longer, because media is now created by demand rather than supply — which is to say the next web page is printed when someone wants it to be printed, not printed and stored in a warehouse in advance if someone who may want it. Turned out that when you have an advertising market that balances supply and demand efficiently, the price plummets. And so for a long time, people could say analog dollars to digital dimes as if — well, when do we get the digital dimes? The answer may be never. The answer may be that we are seeing advertising priced at its real value for the first time in history, and that value is a tiny fraction of what we had gotten used to.

Underserving is even a bigger problem, right? The institutions harrying newspapers — Monster and Match and Craigslist — all have the logic that if you want to list a job or sell a bike, you don’t go to the place that’s printing news from Antananarivo and the crossword puzzle. You go to the place that’s good for listing jobs and selling bikes. And so if you had a good idea for a business, you wouldn’t launch it in order to give the profits to the newsroom. You’d launch it in order to give the profits to the shareholders. This is Bob Garfield‘s thesis from The Chaos Scenario, which is — it’s not just that advertisement is moving from the analog world to the digital world, but that advertising in the digital world is not inherently connected to other kinds of media. Advertising can be media in ways that improve both the advertiser’s outlook and the public’s. So the ability to tell the advertiser, you have to keep advertising with us even though we’re covering your industry is going. That protection’s going.

(12:00)

The unbundling of content

And third — deepest down — the coherence of newspapers is not intellectual, it’s industrial. Which is to say, if you’re running a website and somebody’s on your website and they just done a crossword puzzle and they seem to really like it, what’s the next thing you’re gonna show them? Is it news from Tegucigalpa? No. It’s another crossword puzzle, because that’s the only thing you can [inaudible]. The idea that someone who is doing a crossword puzzle may also want news about the coup in Honduras or how the Lakers are doing — it doesn’t make any sense. It’s never made any sense, in terms of what the user wants. It’s what — it’s what print is capable of as a bundle. What goes into a print newspaper is the content that, on the margins, produces commercial interest in the least interested user. So, in the language of my tribe, the aggregation of news sources has gone from being a server-side to a client-side operation — which is to say, the decision about what to bring together into a bundle is made by the consumer and not at the level — and not by the producer.

Now, there’s been considerable wringing of hands and rending of garments around what Nick Negroponte calls The Daily Me — the idea that we get the newspaper [or] there’s nothing but pure echo chamber. The good news seems to be that people are interested in bulk sources, and they are interested in expert editorial judgment, and they are interested in serendipity. But they’re not interested in omnibus, single omnibus publication. The New York Times is being torn apart right now by its own readers. The number of people who go to the Times’ homepage as a percentage of total readership falls every year — because you don’t go to the Times, you go to the story, because someone Twittered it or put it on Facebook or sent it to you in email. So the audience is now being assembled not by the paper, but by other members of the audience.

None of those three things -– overpaying, underserving, and the incoherence of the print bundle in a web of content — none of those things will be altered by reversing the revenue trend. So the New York Times currently getting out of the business of summaries or recording and they’ve opened an online university and a wine club. The university and the wine club, even if they generate the resources to support the newsroom, don’t change those other three characteristics.

Now this doesn’t mean that all newspapers go away. It does mean that a lot of them go away. Syndication makes no sense in a world of URLs, as the AP is realizing, so they’re saying you can send the traffic to us, instead of us sending the stories to you. So the restructuring that environment, even for those newspapers that survive, will mean that newspapers play a less significant role in accountability journalism in the future then they have the past.

Which leaves us with a giant hole, and a very threatening one. And in the nightmare scenario that I’ve kind of been spinning at for the last couple years has been: Every town in this country of 500,000 or less just sinks into casual, endemic, civic corruption — that without somebody going down to the city council again today, just in case, that those places will simply revert to self-dealing. Not of epic, catastrophic sorts, but the sort that just takes five percent off the top. Newspapers have been our principal bulwark for that, and as they’re shrinking, that I think is where the threat is.

(15:42)

Spreadable media

So what now? Right? The other big question, and the one that’s vaguer in the way; it’s easier to see what’s broken than what’s coming, as is always the case in my work. The first thing, back to the John Geoghan story, back to the Boston Globe report — a huge number of the positive effects from that report were not created by The Boston Globe. They were created by The Boston Globe’s initial audience. The Globe does not have a worldwide audience of millions of Catholics. The Globe is a regional paper. The worldwide audience of millions of Catholics got that story because it was forwarded and forwarded and forwarded. The audience created the public, in fact, to use Starr’s word from The Creation of the Media. The public created itself.

The important audience for that article wasn’t Bostonians, Catholic or no. It was Catholics, Bostonian or no. And the Boston Globe can’t reach those people. So the ability to reuse and republish that material was a huge part of the battle. The ability to take that material and put it in databases like the Bishop Accountability Project, the ability of SNAP to have itself found, because anytime anybody read about it, Google put it one hop away from wherever anybody heard about it. All of those things — that penumbra of reuse around the original article — created an enormous amount of the value of that article.

There is, eerily, something vanishingly close to a two-slide comparison here. In 1992, a priest named Paul Shanley was pulled in for having raped or molested almost a hundred boys in the Archdiocese of Massachusetts. His bishop was also [Bernard] Cardinal Law, and the group covering it was also The Boston Globe. And they ran 50 stories that year on the priest abuse. And that story went nowhere. It shocked people, people were horrified, they were upset, and then it died out. And in the intervening decade, Geoghan kept after it.

We can’t say that if the web had been in wide circulation in ’92, that the Stanley case would have created the reaction to Geoghan case. But what we can say is that many of the good effects in limiting the Catholic Church’s ability to continue doing this were a result of the public reuse of the documents in ways that were simply not possible in 1992 and had become not just available, but trivial by 2000.

I could clip out an article in the paper and mail it to one other person, at great hassle and expense, and that’s about it. By 2002, I put it on a mailing list, suddenly a hundred people read it, and they forward it, and they forward it. It’s one of the cases where the difference in degree becomes essentially a difference in kind in terms of assembling an audience.

(18:45)

Paywalls stop spreading

The prevailing story among some parts of the media enterprise now for recovering from the current difficulties in the commercial model of the 20th century is user fees. Either a paywall, micropayments, per-user charges, per-articles charges, what have you. The effect of that would be to make the kind of value that the public got from the Geoghan article illegal — not illegal, uncontractural. A violation of contract to make use of the news.

Because the whole point of adding these restrictions is to take an infinite good, and to be able to sell it as if it’s a finite good. And you have to prevent the audience’s ability to act as a publisher in order for that business model to work. Now this would be — if it was just a commercial operation, it would be no big deal, right? The people trying to get more revenues than expenses are trying to do it in this particular way. Let the market sort it out.

There’s two reasons, I think, to be skeptical of that. One, we need the public good of the accountability to journalism, however produced. But two, they’re going down to lobby the Justice Department for an antitrust exemption in order to be able to engage in some form of coordination that borders on price fixing if it doesn’t actually constitute price fixing. But the irony is the argument they’re using at the Justice Department is the creation of a public good even — as what they’re looking to do is to erode that public good in order to charge a scarcity premium. So the proposal by Steve Brill et al for effectively an RIAA for newspapers is destroying the village in order to save it. That suggests to me that the ecosystem we’re in now is already different enough from the 20th-century ecosystem that we should be looking at ways of balancing the very expensive and time-consuming production of accountability journalism with the possibility of public reuse of same. Because that public reuse produces a kind of value that doesn’t just come from publication. It comes from republication and reuse.

(21:00)

How public goods are born

So there’s three methods for creating public goods. You go to the market, right? Not public goods, but rather things that are accessible to the public. You can go to the market, and things in the market are created when revenues can reliably exceed expenses. And then you expect some company to set itself up and provision.

You can have a public organization that has some source of income other than revenue, whether it is endowment, donations, taxes, whatever. It typically operates in different legal regime. Producing goods because they believe that that is the right use of that money and they are constituted to pursue those goals.

And then you can have social production where a group of people, just to get together and do something for themselves. Markets are how most cars are produced. Public goods are how much roads are produced. Social stuff is how most birthday parties are produced, how most picnics are produced, right? It has just not been a big feature of the landscape. But, now it is.

The positive supply-side shot to the cost of coordination represented by the Internet means that groups of people who are assembled in non-market and non-managerial modes of production — Yochai Benkler, who’s here, is the great unpacker of this logic — but groups of people who come together outside the market and outside managerial culture can nevertheless provision for themselves enormously valuable goods. Famously open-source software, famously wikis as modes of production, but also things like Amanda Michel‘s Off The Bus experiment first situated at Huffington Post, now essentially reconstituted at ProPublica, or Wikileaks — are models that aren’t using market or managerial culture to nevertheless produce this kind of range.

What the Internet does is it makes all commercial models of journalism harder to sustain — not impossible, but harder. And it makes public models easier to sustain — partly because of the lowered cost, partly because of the [inaudible]. And it makes social models much, much easier. So we’re seeing, I believe, a rebalancing of the landscape in terms of the logic of the creation of public goods away from a market dominated by commercial interest into a market where all three of these modes of production are going to be operating side by side in different ways.

The other…so that is, I think, one feature of what we want from the future, which is that whatever experiments are undertaken, we want them to be across that range — all three of those different modes of market production. The other thing I think we want is we don’t want to replace newspapers, right? Not just because we can’t, but also because the problem we’re facing now isn’t that a commercial entity that did something we like is going away. That happens all the time. It’s the nature of capitalism. The problem is that the thing that’s going away, newspapers account for 85 percent of, by the figure Professor Jones has in Losing the News — which is the vast bulk of this iron core of news is produced by one class of entity. And anybody who thinks about large-scale system design recognizes that is effectively a single point of failure problem. And if anything bad happens to the institutional model of this 85-percent producer of this thing we care about, the whole system is suddenly at risk. And that’s effectively the issue we’ve got.

(24:42)

Replacing newspapers

So we don’t need another different kind of institution that does 85 percent of accountability journalism. We need a class of institutions or models, whether they’re endowments or crowdsourced or what have you — we need a model that produces five percent of accountability journalism. And we need to get that right 17 times in a row. That’s the issue before us. There will not be anything that replaces newspapers, because if you could write the list of stuff you needed and organizational characteristics and it looked like newspapers, newspapers would be able to fill that role, right?

It is really a shift from one class of institutions to the ecosystem as a whole where I think we have to situate the need of our society for accountability. I also want to distance myself — and I’ll end shortly. But I want to distance myself, with that observation I also want to distance myself from the utopians in my tribe, the web tribe, and even to some degree the optimists.

I think a bad thing is going to happen, right? And it’s amazing to me how much, in a conversation conducted by adults, the possibility that maybe things are just going to get a lot worse for a while does not seem to be something people are taking seriously. But I think this falling into relative corruption of moderate-sized cities and towns — I think that’s baked into the current environment. I don’t think there’s any way we can get out of that kind of thing. So I think we are headed into a long trough of decline in accountability journalism, because the old models are breaking faster than the new models can be put into place.

To use the historical analogy from Eisenstein, from The Printing Press as an Agent of Change, there was a long hundred years between the Protestant Reformation and the Treaty of Westphalia. And that was a hundred years in which people almost literally did not know what to think. The old institutions were visibly not functioning any longer, but the nation-state as a new organizing principle was not yet in place. And those were, for many people, not a great hundred years.

So I have no idea how long this transition will take. But I don’t think that some degree of failure and decay is avoidable. I think our goal should be to minimize the depth of that trough, to constrain that trough to the areas we can constrain it to, and to hasten its end. But I don’t think we can get away with a simple and rapid alternative to what we enjoyed in the 20th century — in part because the accidents that held that landscape together in the 20th century were so crazily contingent.

And so I’ll end with an observation that I think may give Professor Jones and I a place of both agreement and disagreement. And that word is “irreplaceable.” I believe, and I only take seriously people who believe, that newspapers are irreplaceable in their production of accountability journalism. And then the questions becomes, “So what do you think of — how do you regard the media landscape?” People who believe that the media landscape is still amenable to a high degree of the kind of commercial support that would keep newspapers alive, look at the irreplaceability of newspapers and think, “We should expend any effort or resources we can to keep ourselves from having to replace them.”

On the other hand, people who look at the media environment and say the current shock in the media environment is so inimical to the 20th-century model of news production that time spent trying to replace newspapers is misspent effort because we should really be transferring our concern to the production of lots and lots of smaller, overlapping models of accountability journalism, knowing that we won’t get it right in the beginning and not knowing which experiments are going to pan out.

So it’s possible, I think, for people to agree about the irreplaceability of newspapers, but to disagree about how serious the change in the media environment is. And the more you are convinced, as I am, that this is a fairly significant revolution in media production, the likelier it is that the irreplaceability of newspapers suggests that the next step needs to be vast and varied experimentation, not the transfer of allegiance from one institution to another. And there I’ll end.

(29:35)

[applause]

Questions and answers

Jones: We agree on many things. We don’t agree that newspapers are ready to be abandoned. At least that’s my own feeling at this moment. But I certainly don’t in anyway suggest that I don’t think that your thinking has an awful lot of weight and power and of course high intelligence behind it. I think that one of the things I would — I just wanna ask one question, and we’ll open it up. But I want you to imagine, if you will, that thing which you are, that you think shouldn’t happen, but probably is going to happen anyway, which is, that there is going to be an effort, to save these institutions or to at least replace these institutions. The Boston Globe incident with the Catholic church is very instructive for another reason, it seems to me. I remember the day, that Sunday morning, when those stories appeared on the front page, of The Boston Globe. And in that day, on that day, including that story, was the fact that the Catholic Church would simply not agree to engage this at all. They simply were not part of the story.

The power of the institution that put that on the front page, I believe, married, with what you described, this viral aspect, was what brought the Catholic Church to heel and force the Catholic church to have to deal with us.

Shirky: Yes.

Jones: I think though, that it’s important to remember, that was, — that a lot of what was on that front page, had already been reported, in that same, relatively same period of time, by The Boston Phoenix. So the mechanism of viral information was there. But it took the power of the Boston Globe, the institutional power, married with this other, to make this happen.

Now what I wanted to ask you is, can you, as you sort of imagine this future — do you see in this array of of smaller entities, an institutional power, that is going to, not just simply make this information available online, but effectively force the attention of the public and bring institutions of power to heel. You know, there’s a great deal of information on the web right now, that’s important and damning even that is ignored. Without that institutional power, it seems to me, something very important is going to be lost, and I wonder if you see a mechanism of any kind to replace that.

Shirky: Well yeah, but there’re so many — so none of them simple, because of this change and there’re so many different, different threads there, but — that is in a way, the great weakness of the experimental trough, which is no one institution, no one journalistic institution, has the kind of anchor of the community as a whole behind it.

Newspapers — people, people, people in the newsroom side, I think often overestimate the degree to which people buy the newspapers for the news, but you know — anyone who’s tried to study this finds that, that, you know, variously sports scores, the weather, horoscopes, coupons, and so forth, rate above news often.

There’s a form of cross subsidy in which people who are clipping coupons and reading their horoscopes are subsidizing hard political news for the small or even moderate sized core of people who care about it, but don’t make up certainly the totality, or even in some cases the majority of the paper. The sort of “come for the crosswords, stay for the war crimes” theory of newspaper reading, I think, doesn’t actually work by and large. The one exception is the front page. Where an editor is essentially saying: “Today the story is on A17, but if something doesn’t change, tomorrow it’s going to the front page.” And the Watergate story in a way crawled it’s way up out of Metro. I mean both those guys were Metro reporters. And it became, you know, the journalistic story of the last 30 years.

So at least part of the institutional power is the ability to swing an audience, that is part of the political core of any society that demands answers. The easiest way to imagine that is exactly as you say — there is simply a counterweight institution to the church and it’s The Globe. There’s a counterweight institution to Ford and it’s The New York Times.

We’ve lost the ability for media to operate as force in almost all cases — which is to say a lot of the forces associated with previous forms of media had to do with scarcity, and that the scarcity premium in almost all media is vanishing.

So I think the question there is: Can we provide news that gathers an audience, that has the function of The Boston Globe has of assembling a public that matters to these institutions, in ways that bring those institutions to heel. And I think to put the most optimistic face on my call for experimentation, we would say we don’t know what it is yet, but it’s there. And to put the most pessimistic face on it — the notion when a handful of large journalistic outfits, whether it’s Don Hewitt or Arthur Sulzberger, can bring institutions to heel is probably fading with the mass audience.

So I guess all I can say is I recognize the danger. I don’t think there’s a way to preserve that given the change in the environment — meaning I think we have to invent alternate ways of assembling those publics. The one asterisk I might put on there — and I don’t know enough about the economics of this, and you probably do — is Steve Coll’s thesis, which is that rather than rushing around for revenues over expenses, newspapers should just convert themselves to nonprofit models. If you go up — if you want to see coffee come out of a journalist’s nose, ask them if they’re in it for the money. And yet when you look at — I just recently got a copy of the hometown paper I grew up with, the Columbia Daily Tribune in Missouri, to show my 25-year-old students, like, “Look, here is a newspaper. You may want to hold it in your hand to see what they used to be like.” And reading it, I was astonished at how much of it’s syndicated and wire service now. I think there are about a dozen people in my hometown doing accountability journalism. Not counting production side, obviously, but just reporters and editors — I think it’s about a dozen. And I think their salaries are not large, certainly not relative to the publisher or the head of ad sales.

And if you could just write a check to those people, you would actually be able to create a world in which freedom from commercial interference was superior to the current commercial model. So I think that may be the one — it’s transformation in the direction that I’m talking about, which is, you know, public sources of money held as of right. But it preserves the institutional leverage that you’re talking about where there is a newspaper in town that essentially is first among equals in being able to hold institutions in the local purview to task.

(37:29)

Jones: We’re going to give the first shot to students. If you are a student at the Kennedy School, you have the — yes, please.

Shirky: Well, so, I asked Nick Lemann up at Columbia about this, and he said — and we were talking about, in particular, subsidy models — and he said of both The New Yorker and The Atlantic, these are essentially nonprofits operating in a commercial environment. The New Yorker — there was a period there where The New Yorker actually made more money from ads than it spent on its writers. And that period preceded a global recession. And I think it may be, in fact, a leading indicator of an ad market gone mad when an organization like The New Yorker can actually make enough money to pay for what it costs to run, because The New Yorker has operated at a loss for almost the entire history of its existence. And that’s effectively in the normal case — as it is for all journals of opinion, right?

Radio journalism falls into two camps: NPR and not NPR. I think the amount of radio journalism done by “not NPR” is of pretty limited utility and tends toward, you know, mob hits and car crashes. Whereas NPR, again freed from, to some degree, commercial constraints — unfortunately, the web has now erased the difference between sponsorship and advertising, because a URL and sponsorship spot is a piece of direct marketing. So NPR is now unfortunately more beholden to its advertisers than it used to be. Nevertheless, NPR, by going the donation and now this grant route, is relatively free to make longer-term, larger-scale, more speculative kinds of reporting. They’re also feeling their way because they have significant channel conflict with their affiliate stations.

And so they are in a real period of realignment, but I think it’s no accident that [Vivian] Schiller, the new head, came from The New York Times, and I think that communicates something about NPR’s sense of stepping into the gap — again because they don’t, they’re not suffering from the commercial vagaries. NPR, which used to be — talk about media and then at the end you’d go, “Oh! Yeah, then there’s NPR” — like, what a weird special case — is turning out to be something that may be closer to the model of a next set of institutions, than really the whole of the Clear Channelling.

I think the magazines that we reflectively look at — you know, Atlantic and New Yorker now; there used to be Harper’s and The New Republic, but those have also shrunk — the ones that we most respond to, and the radio we most respond to, has exactly the characteristics of having exited in one way or another the short-term commercial constraints in order to be able to do the kind of work they do, and I think we’re going to see more of that.

Student: If they’re losing money though — if they’re chronically losing money, how are they able to stay afloat?

Shirky: You could say that of the government too. I mean, they’re able to stay afloat because somebody gives them new money every year. They’ve all been supported by millionaires, or now billionaires. The New York Times is vanishingly close to that model now, with Carlos Slim‘s investment, except he’s getting 17% off the top. But the subsidy by people who want to see that kind of media succeed has kept The New Yorker afloat for the entirety of its life with the exception of a handful of years in the 2000s, so the loss on money becomes almost conspicuous consumption. And it’s a little bit icky and Renaissance to think, ‘Oh yeah, we have these great magazines because they’re being funded by rich people,’ but that’s the fact of their existence. And were they to be remaindered to the commercial market, they would shrink or fold. So that’s — I think that’s really the conundrum. And the way you get around the problems with any one media model, I think, is to have lots of models, rather than to pick the one that’s wrong. So in my mind the bug in the newspaper model is not so much the ‘This is how they did it,’ as the ‘We let them do 85 percent of what we needed’, because suddenly their loss is not a crisis but a catastrophe.

Jones: I think The New Yorker though is a very interesting situation, because what happens when Si Newhouse dies? It’s owned by a private family-controlled company, and Si Newhouse is one of two brothers that divided the authority for running this company. And Si had the magazines like Vogue and The New Yorker, and his brother Donald had the newspapers. The newspapers were providing most of the money. That’s no longer true. Donald, basically for instance at the Newark Star-Ledger, cut its newsroom in half. If something happens to Si Newhouse, I really wonder what will happen to The New Yorker. And I think that’s almost inconceivable to a lot of us. But I mean I think that the —

Shirky: Never ever say that word!

Jones: But I think that we just don’t know.

Shirky: I mean, GM thought that too. Like, every time I hear that word, “unthinkable” or “inconceivable,” I just, you know — that is the danger sign.

Jones: Absolutely. Yes sir.

(43:10)

Student: I think the corollary with that eroding the base, and the revenue base for all those things — but it’s also much easier to acquire information now as well. So I mean, for example I worked this summer on OpenCongress.org. [crosstalk] All of a sudden you’ve got this ability to aggregate all this information about Congress, and not just from news sources, but also from the publicly available sources as well that trumps anything. I can’t find as much information at times about Congress as I can on OpenCongress.org…And so you’ve got that, as well as a corrollary of more legislation about transparency, about the electronic availability of resources and things. So do you feel like that maybe takes out 20% of it?

Shirky: I don’t know about 20 percent, but this is exactly the model of lots of overlapping five percent things, which is: A way to keep the federal government in check is to have better transparency and better reporting. And interestingly in the history of communications, the executive branch has always embraced new technology, and the legislative branch has always fought it, so — even as FDR is doing fireside chats over the radio, Congress is trying to ban reporting of its doings over radio, so whitehouse.gov preceded OpenCongress by some years because the executive essentially has the bully pulpit, whereas Congress of course has the gritty daily workings of it.

First of all, the MySociety stuff in the UK, OpenCongress, Sunlight Foundation — all of these are really fantastic inputs to the democratic process. The one thing I would say about their subsequent reuse is the last time we had a big push for transparency, which is post-Watergate, it created K Street. Because prior to the sunshine laws, hiring a lobbyist was like hiring a shaman, right? They’d shake some chicken bones over some senators, the senators would go off in private, you know — the Association of Seal Club Salesmen would come in and lobby for no restrictions on clubbing seals. The senators would go and vote and then they would come out and say, “Oh, I was really fighting for Americans’ rights to club seals, but, you know, sorry, you lost.” No one really knew how the senators voted, so you couldn’t do lobbying as a fee-for-service business.

And after the sunshine laws, after Nixon, all of a sudden you could — because you knew how everybody voted. And K Street is built on the sunshine laws, because it’s not just having transparency that matters. It’s who does what with it. And you would expect, other things being equal, that the more organized groups will do more with transparency.

So the thing that I keep saying around the Open Congress and Sunlight Foundation people is it’s not enough to make the data available. We also have to make the public able to assemble and act on the data. And that’s the thing I take from the two-slide comparison of Paul Shanley and John Geoghan, which is the ability of people to make use of the material was one of the dispositive effects. So I think the big point is yes, absolutely, transparency is valuable, but downstream we need to worry about the consumption of that data and organizing ordinary citizens — not just waiting for K Street on steroids to form around these databases.

Student: Well that’s the frustration. I mean, I’m a political organizer…

Jones: Okay, we’re going to have to — we’ve only got a few more minutes here.

Student: Sorry.

(46:56)

Student: We’ll just play off what you just said. What is the model for something like ProPublica, right? You have this great investigatory reporting, but it’s not reaching the Average Joe. In the past model of the newspaper, you know, they’d pick up the newspaper and they may not be looking for the investigatory piece on City Hall, but they were getting it. So what is the model now that you can kind of pick your own newspaper?

Shirky: So almost no one got the investigative piece on City Hall, right? Unless the mayor was, you know, having an affair with the DA, City Hall news is not front page news by and large. So we have this view that the readers of newspapers read the whole thing, but the cross-subsidy of the people who cared about sports scores and mutual funds of the handful of us that cared about what the water board was doing in City Hall has always been the mechanism by which newspapers hold city governments accountable — which is to say there’s never been an Arcadian paradise in which all citizens care about all politics.

So that is a nakedly elitist point of view, but I think it is one that corresponds better to the historical fact of particularly civic government than the kind of populist view. So the question about ProPublica, I think, is not is it reaching elites so much as is it reaching elites as efficiently as it used to or less or more? And is it giving those people the same tools they had to keep city government in check as before or less or more?

The grave danger of that, I think, is not not reaching Joe Sixpack, who has long since turned away from newspapers as a form in any case, right? The newspaper audience has been sliding since the mid-’80s. The grave danger is that our political life is still organized around geography, but the web? Not so much. And so political issues that are intimately tied to a particular county or a particular state, the kind of midpoint between nation, which is a wholly imagined community but one that people focus on, or my local neighborhood, which is a real community. That middle zone — like county government, the sheriff’s office, what the state comptroller’s doing — that’s really hard to do on the web, because web stories are either hyperlocal or they’re the kinds of things that spill across national borders like water, like the Catholic story, right? You know, the Italians and the Poles were reading this just as surely as the Bostonians. And that — I think ProPublica is well suited for both national and local reporting, but regional reporting, both in the sense of states and counties, I don’t think it’s well served for. Because there’s — the advantage of newspapers was the fact that you could only sell a newspaper as far as a truck could profitably drive — effectively meant that you had the side effect of having the media market and the political markets overlapping, and now not. And that’s where my worry is, is not at either end of the scale, not hyperlocal or national, or in the case of the New York Times, our only hyperglobal publication in English, but state and county — that’s where I think this trough is going to be, is going to be worst. And I don’t think, I don’t think that ProPublica can do much about that. Not because of anything with ProPublica — I think they’re great — but because I don’t think anybody’s cracked that nut and I think that’s where the problems are going to be.

Jones: There’s a student over here.

(50:25)

Student: How does The Economist model fit into your thesis, I guess? Because they’re actually growing, aren’t they?

Shirky: They are growing. So the one big asterisk to the value-of-sharing model is financial news, because financial news is not valuable the larger the audience is. It’s, in fact, valuable the smaller the audience is. I don’t want my mom reading what I know about IBM until I get my trades in. And so, a paywall is — a paywall damages general news and benefits financial news. And it is no accident that the three great models of pay walls — The Wall Street Journal, The Financial Times, and The Economist. Because although they have general interest sections, they are all, at base, niche publications for traders and business people.

You could see something of the trade off around pay walls when the FT held up as a successful model. The FT’s audience online is around one percent of the Times’ audience. And if the Times would go back to a pay wall model and see even a one order of magnitude shrink rather than a two order of magnitude shrink — suddenly you have millions of people who are not as well served by the creation of public goods. So I guess the answer is, I don’t believe that The Economist, FT, and Wall Street Journal model are applicable to general news, as The Economist doesn’t, right? The Economist put its own opinion columns outside the paywall, because it knew that for an opinion column, this wide circulation is the value.

But they don’t put their — they don’t call them stock tips, because they’re not allowed to, but their stock tips are inside the pay wall, because people will pay for the fact that there’s barriers. It’s the $17 martini logic, right? What goes into a $17 martini is three dollars worth of gin and fourteen dollars worth of “I’m drinking in a place where people are drinking seventeen dollar martinis.” So the obstacle to consumption is a service for the models that work, but that not only doesn’t apply to general news, it damages the public utility of general news. Which is why I think Brill’s plan for the RIAA for news may — it certainly could provide some revenue, as paywalls have always provided some revenue — but in the matter of what we care about as a civic population, not for the commercial fate of newspapers, it destroys the village in order to save it.

Jones: Let me just open it up to everyone.

(53:02)

Bill Mitchell, Poynter Institute: Clay, I think, your description of advertising — in terms of the way in which the overpayment by advertisers and the underserving of advertising — really dramatically paints a picture of how the stakes have been raised for every other floor of how we might sustain news, especially news in the public interest. And as you described your three models — the commercial model, the public model, and social model — I’d ask you…look at what it is in each of those that really holds value for the public at large. And what is it that, that value — that people might pay for. Not necessarily in terms of a paywall. That raises obvious problems in terms of general distribution. But, how might they pay for it in terms of donations? How might they pay for it in terms of committing acts of journalism themselves? So what’s the core of the value, and how might people make a decision in response to that value?

Shirky: The core of that value is the set of values — in fact, I wish I had Losing the News here, because you go through those three from the list of ten journalistic values. I don’t remember them off the top of my head, but I think the core of the values are accuracy, timeliness — you know, the kinds of things we expect. But, additionally, because we have a media landscape in which this is now, not just possible — shareability. Spread. Other things being equal, general news is more valuable the more of the relevant public knows it. The social model’s principal source of subsidy is donated time. And the public model’s principal source of money is — principal source of resources, rather — is money unconnected to commerce. And those two aren’t mutually exclusive. In fact, there’s lots and lots of additive models. ProPublica is a classic additive model. There’s a grubstake for a nonprofit foundation, and also Amanda’s there doing lots and lots — Amanda Michel who did Off the Bus — is also there doing lots and lots of experiments in crowdsourcing.

People will pay or donate around all kinds of things. And, because that’s such a new thought, I think news outlets haven’t experimented with it much. But SETI@home, the search for extraterrestrial intelligence, used donated cycles to aggregate what was, for a time, the world’s largest supercomputer measured in pure teraflops. And the reason people donated wasn’t just that they wanted to participate in the search for extraterrestrial intelligence, but also you’ve got this totally cool screensaver. It looked awesome. It looked like you were on the deck of the Enterprise. And that was enough, right? You get this cool screensaver. You have some sense you’re doing a good thing. And all of these resources suddenly aggregate to this particular project.

NPR. I get an NPR totebag when I give money to NPR — not because they’re worried that I might bruise my organic arugula on the way home from the farmer’s market but because while I’m at the farmers’ market, my tote bag is saying, “I’m paying for all y’all’s radio. So, show me some respect, right?” And, I think that condition of kind of macherhood is one of the great, underestimated potential values in voluntary contribution.

When — what was their names in Denver — Rocky Mountain News, right? So, Rocky Mountain News goes under, the journalists say, “We’re coming back. We are going to reassemble this.” And to their shock and surprise, six percent of the audience say “I would pay for that.” And to them that said: total, total non-viability. No one inside the halls of a public radio station would have been surprised by that figure. And all public radio does is argues about whether or not they can turn six percent into eight percent or 10 percent. That is the range in which public radio donation largely operates.

So if the Rocky Mountain people had said, essentially, “How do we get six percent to work?” rather than taking evidence that six percent constituted failure, they would not have been able to reconstitute the newsroom in its old form, but they would have been able to constitute something.

So I think that people will pay for all kinds of things, including being paid to both think of themselves and be thought of by others as the people who are paying for the public service. And someplace between those two models, which is the kind of cool screensaver or giveaway model and the you-are-a-macher thing, you have a community model — I think you can put together some financial viability.

Even public radio doesn’t always get this right. I heard the most incredible, like it was like the 20th century had been delivered forth on a bier. WNYC was giving away the soundtrack to the Martin Scorsese film of the Rolling Stones. So names that were around in the 20th century, right? You can’t imagine a 25-year-old having any real — like, “Who was that?” And then they said, “This will be good for your CD collection.” No one has a CD collection. [laughter] That’s like keeping the box the book comes in. They rip the CDs and it’s on their iPod. And you hear in the entirety of this giveaway, “This is only for people over 50,” right?” This is what the idea of a CD collection — like, those are the people we’re reaching. And you think, what if you try to think of something that would appeal to 25-year-olds? But even the people who have the donation model right, don’t yet understand the degree of the change. So I think even among people who are relatively shielded from the commercial market, there’s room for a lot more experimentation than there currently is. And I’m sorry, I mean capable of answering question in short.

Jones: The word for today is macherhood. I feel like I have — the scales have fallen in my eyes on this. We have time for a couple more questions. Oh, I’m sorry. Melissa.

(59:45)

Melissa Ludtke, editor of Nieman Reports: Okay. You brought to mind, when we were talking about the Sunlight Foundation and the rest, you know, it just brought to mind the story that was done on Randy Cunningham, the Congressman. And what it took was for them to take what’s in that database and to figure out how to tell a story. How to make it a narrative. And at the base of things, that’s what journalists have been trained to do. But there are journalists — they’re separated from storytellers such as fictional writers, etc., by some of the values and the ethics that have been brought up with the profession and the principles that are there.

So I’m wondering — you’ve talked on a very institutional level here. But the same people who did that story on Randy Cunningham and won the Pulitzer are now out of work. Copley News Service is out of business.

Ludtke: The bureau no longer exists. It’s not there. So it brings me to the question of who is going to be the ones to tell the stories that — no matter how they’re shared, whether they’re in a commercial model, a public model, or a social model, who’s going to be telling the stories? And to get to your values of accuracy, reliability, all of that — how are we going to serve the public good in terms of those stories being ones that people can actually rely on?

Shirky: Richard Hackman, who’s also here, and who does amazing work on models of teamwork. He’s a social psychologist who studies how teams work. And he’s got a book called Leading Teams. But one of the things he’s concluded, and I think we’ve seen play out in the marketplace, is that groups are no good at writing.

Whatever you can say about Wikipedia — and I say a lot, I mean I love it — the quality of the writing, not of the finest. And, this is what I think Michel’s most important discovery during Off the Bus was. The original idea of off the bus is that everybody could be David Broder, right? Then it turns out that a high percentage of the people who could be David Broder already are David Broder.

That barrier was kind of a crisis for her. And then she said, you know what? These people didn’t want to write anyway. They’re nervous about writing, they don’t do it well, they know they don’t do it well, they’re not excited about doing it well. So, she started doing stuff like sending hundreds of them out to cover all of the individual counties of Iowa during the caucus — something that no professional reporter can do, which is to be in 436 places at once. And then she aggregated those stories and gave them to the professional storytellers.

So I don’t think that storytelling is one of the things that syndicates well, but I do think that the inputs of the storytelling syndicate well. And I think the old telephone model of “I call the source and I call the source and I call the source and it’s all just a bunch of point-to-point connections and then I integrate it and I write my story” is giving way to a model which is closer to a database, which is “all the data is there and I’m given the tools to shape it and then tell the story.”

So what Michel ended up with was a pro-am fusion, a professional-amateur fusion of amateur inputs of the sort that you literally could not buy on the open market, but the stories written by people who were good at storytelling. That’s, I think, one of the — ProPublica’s probably one of the great models of this. Smoking Gun, to some degree, has some of the same characteristics. But I think that hybrid is the way to do it.

That is different from the Randy Cunningham question, which is a question of the old economics and the new economics. That’s not saved by this problem. But, in a time of everything breaking, a lot of stuff does not get saved.

Ludtke: But maybe between the database — you have the documents, you have Congress as a transparent institution through some of this. If you used your pro-am model and you sent people out to Randy Cunningham’s district and started asking these people “What do you think about this guy?” or “What’s going on?” I mean, with enough direction…

Shirky: The sourcing of the ACORN takedown is exactly one of these models.

Ludtke: Then you brought it back. I mean, I don’t know.

Shirky: I mean — no one is smart enough to get it right, which is why we need lots of experimentation.

(1:03:55)

Bob Giles, curator of the Nieman Foundation: The New York Times is telling us that they have 800,000 readers who have been with them for two years. They’re now charging $700 a year to read the paper. And they are counting apparently on this strategy to take them into the future. Is that sustainable?

Shirky: No. Someone wickedly tweeted the other day that newspapers should rename their local obituary column “Subscriber Countdown.” The industrial logic of the printing press, which has given so much of the geographic reach and bundling and overcharging while underserving advertisers and so forth — its salience is itself a wasting asset. So, they should certainly get all the money they can out of that. But everyones pursuing a paywall — not everyone, many people are pursuing a paywall, and they’re essentially saying “We’re doing this to stave off the leeching people away.”

Even admitting the superiority of reading on paper to reading on screen, Hewlett Packard is a better source of that value than the college point printing press. You’d rather have the bits delivered to your house and print them than have them produced as some distal place and driven to some other place, and driven to another place to have them deliver it to your neighborhood. So the basic economics of industrial production around paper are inimical enough that that strategy will carry them into the future only as trailing revenues.

I really liked your blog quite informative and interesting facts and figures you have discussed on your blog even the comments are very fruitful and helpful in enhancing the knowledge regarding the topic.